Kelly Partners Group Holdings Limited (KPG) Earnings Call Transcript & Summary

Terrific. Well, it's always good to start on time. Welcome, everybody, to the Kelly Partners Group Holdings Limited financial year '24 results. My name is Brett Kelly, the Partner and CEO of Kelly Partners, and I'm joined by our Chief Financial Officer, Kenneth Ko. In a break from tradition, we thought that we'd start today with Ken showing the financial results. So, no pressure, Kenny. I'm panning over to you.

No worries. Thanks, Brett. Hi, everyone. Great to present results again to everyone. I'll head straight to the financial highlights section of the slide deck, which we released this morning. As usual, we have our financial highlights slide that summarizes our current year results and some key financial metrics compared to the prior year. I won't go through a lot of these because the actual subsequent slides cover a lot of these. I'll leave this for you guys to have a look at yourselves. But I'll start off initially with the income statement. Our revenue for FY '24 was $108.1 million, and it has grown 29.2% compared to the prior year. That growth has been driven by organic revenue growth and contributions by acquisitions completed in the prior year and in acquisitions completed this year. I just want to note here that the organic revenue growth was impacted by 2 things: one being the finance broking businesses revenue being impacted by macro-economic environment changes and also closure and merging of some of our sub-scale businesses into our larger and more scaled up and mature businesses. Excluding these impacts, the organic revenue growth for the group was at 5.3%. Our EBITDA margin after taking into account additional investments in the parent was at 27.8% compared to the prior year of 22.7%. Obviously, last year was heavily impacted by the additional investments. This year, we still did additionally invest in the company to accommodate the growth in the business, but our margins have improved significantly from the prior year. Excluding the parent additional investments, the EBITDA margin of our operating businesses was at 29.6%. Underlying NPATA attributable to shareholders increased by 52.3% to $8 million compared to $5.3 million in the prior year. I just want to bring everyone's attention to a few highlights on the P&L. The operating expenses increased less than the revenue growth. We continue to have an increased amortization expense because of our acquisition activity, which has led to a much higher customer relationship intangible assets and a higher amortization. I've put an explanation in the directors' report to explain how this works because we often get asked by shareholders about this. The explanation in the directors' report should give everyone clarity on that. In terms of the finance cost, that has increased as well due to the rise in interest rates as well as taking on additional debt to finance acquisitions that we've completed. The statutory NPAT has reduced, but as I mentioned before, mainly due to an increase in the amortization of customer relationship expenses and also accounting for non-recurring expenses, which included costs that we've incurred for our strategic review as well as the costs of the acquisitions that we completed in 2024. Going on to the balance sheet. Our net debt to underlying EBITDA has decreased to 1.28x underlying EBITDA, and that's due to a full year's profit contribution from the acquisitions we completed in the prior year as well as a general increase in the profitability of our operating business in the group. We continue to have very strong ROE across the group and the parent. Our lockup days is at 56 days as of 30th of June. I just wanted to highlight that our WIP days was at 3.7 days. I think it's quite good to highlight as well that our net debt increased 13.1% since the prior year, but our revenue increased 29.2% and our underlying NPATA increased 52.4%. I would also like to just bring me your attention to the next slide to have an overview on the debt of the business. So on the right here; comparing our net debt to last year, our net debt grew by $5.2 million from $39.9 million to $45.2 million. That's in general due to funding the acquisitions that we completed this year. On the left here, we show you our debt and our available headroom. As we shared last month, we have secured a $22 million facility from our banking partner in Australia, providing us with that facility for our U.S. expansion and general corporate purposes. You can see that our cash and headroom has increased substantially, subset $40.4 million at 30th of June 2024. Also, our acquisition term debt is repaid over 4 to 5 years. That brings me to the next slide to the cash flow slide, where leading on to this, I wanted to take everyone to our debt reduction, which has been $8 million and an additional $2.5 million in additional debt repayments totaling $10.5 million in debt repayments. that's why our debt has not increased substantially compared to the prior year because of our disciplined approach in repaying the debt. Our cash from operations is $20.2 million and has increased by 30.7% compared to the prior year. Our free cash flow has increased 44.1% and we continue to convert our cash flow at 85% to 100% conversion ratio for FY '24, our cash conversion was at 96.9% compared to 94.4% in the prior year. The final slide that I would like to bring around its attention to is the parent and NCI waterfall. We often get asked this question by shareholders. This year, we have changed the representation of that reconciliation to a more graphical presentation using a waterfall format, and it shares with you how the parent's 51% reconciles to the statutory NPAT. So, we have here in the first 3 bars essentially costs directly relating to the parent in terms of the parent's tax, the parent's own finance costs related to its debt or its attributable debt from the operating businesses and depreciation relating to the parent. We then have the additional investments in the parent, and it's at $1.9 million this year compared to $2.5 million last year. We also have nonrecurring items, which I shared earlier, including the cost of the strategic review and the cost of the acquisitions. That's it for me. We've prepared a more shorter and concise deck this year. But all the other subsequent slides that we normally release and produce there in the appendix for everyone to look at your own time. Thanks, Brett.

Thanks, Ken. We had over time some shareholders ask me could Kenny speak more. So, we're putting Kenny under some pressure to speak more. Okay, there you go. Thank you, and great job. I hope that all of our partner shareholders can understand the numbers clearly. We don't think that they are complicated, and we do think that they're consistent with a long-term approach that hopefully you've become quite familiar with. So, in terms of where the group stands today, the 600 team members, including 100 partners, 37 businesses in 4 countries, $108 million revenue at 30th of June 2024 with a $130 million revenue run rate, its 45 million shares on issue, might actually be 44,950,000 shares on issuers. You'll note that we bought a few shares back a few months ago, and free cash flow per share, $0.174 per share. That's 28% return on invested capital plus organic growth, which we think is an appropriate measure to think about over time. So, the group is well positioned to execute on our strategic plan to become Australia's global accounting firm for driven private business owners. I'll just share a little bit of an update, a lot less slides this time, but we'll do our best to sort of explain what round about. Mitch Rales a founder of Danaher recorded a really tremendous podcast, which to recommend everyone listen to on the Art of Investing podcast, which is really great. We've sort of got a nice picture here with Jim Collins, Good to Great book in the background. We're going to have another book in the background, that Jim wrote before that Built to Last. Really, the question for founders is, are you building a business that's built to flip? Or are you building a business built to last? Which shows from inception to build something that we think is built to last. I think Mitch makes a great comment here. We think institutions are greatness, aren't again built quickly. It's hard to be great quickly. It takes time in compounding. So, I think it's a 20 to 30-year effort to get 100x outcome. We think that the book 100 Bag has confirmed that its research as well. The second screen, I think, is good just to underline that everything we share with you, we just shared with you in good faith based on what we know, but also understanding that we don't know a minute of 1% about anything. While we believe that being a hedgehog is the right way to play and that what we do know about is building and managing and leading accounting firms, counting tax firms focused on private business owners with $2 million to $10 million of revenue in each case. We think we know quite a lot about that, but we think that's probably not a minute of 1% of much. So we won't make the mistake to imagine that because we know a lot about very little, but we know a lot about a lot. The next slide just shows clearly that the business is posture in terms of a leading business in Australia, growing in Hong Kong, we've been in for over 8 years, into India for 12 months and a little bit now and now into the U.S. that we're on our way to build out the next leg of our journey. We're 18 years old, and we're a bit like an 18-years old. We're building some strength and some enthusiasm like a teenager, but we're not fully grown yet into all of our potential. On Page 5, we've got our one-page Kelly Partners in 10 seconds, KPG in 10 seconds. We'll just recommend that to you. But I'd draw your attention to a 40.6% return on equity, a high ability to deploy and get a return on capital and a discipline around capital allocation with a group ROIC of 24.8% annual organic growth. These are ultimately drivers of long-term good numbers. I think everything else is in quite good shape. On to the next page, we've got industry-leading margins, and you can see where those margins are generated across the various businesses we're operating in. We think that long term, we're not aiming to be big. I've often said in our industry, the big 4 are called the big 4, then I'll call the excellent 4. We just want to be excellent, and we think we can grow as a result of being excellent. On the next slide, there's our summary format of our capital allocation that I hope you can who can have some familiarity with now. You'll notice that we're trying to generate returns on the same capital base. We haven't issued an additional share or raise any equity since IPO 7 years ago now. I think that's looking quite consistent and okay with some improvement to come. On the next slide, it highlights that a little bit more graphically in terms of EPS and free cash flow per share. Those numbers are just over 5-year periods, I think, solidly growing as we'd hope to see for a long time to come. On the next slide, I think the most important thing about the business is that we have a business system, and that system is now quite proven in its ability to double the business on some type of cadence often ask me, will that be every 3 years or 5 years or 4 years. We've always said judge us in 5-year periods. We'll work very diligently to develop the business. We've doubled the business 6 times in a row. While I think the average is about every 3.2 or so years, all of 4 years, 3.5 years. Take the best one and the worst one and you get somewhere in between. But what's most important is that we do that in a sustainable way and we do believe it's our business system that allows us to do that. On the next page is just the usual list of financial measures, and you make up your own mind about which one is most important to you, but I think they're quite good things to consider in each case. On Slide 11, we're just highlighting that in Australia, the U.S., the U.K., these are hard places to pay tax. Even if you want to, most people don't. Tax payers pay massive cost of compliance, massive succession challenges across all of those markets and the tax codes are complex, and they're growing each year. We think that the structural dynamics of the opportunities that we started on 18 years ago are strengthening rather than diluting. On the next slide, we just outlined our strategy, be top 10 in Australia. If you look at the industry here that for the first-time we've outlined publicly the way that we think about the industry, we think that we're probably the 10th largest accounting firm in Australia, the way we think about it. We don't regard the big 4 as accounting firms, the global consulting firms that do some accounting, we look at our traditional alternatives for clients that we look to target, and they look a little bit like that list. But very importantly, our revenue from audit is 5% or less or it's likely to be impacted by technology. Its high risk and lower margin and we think we're very strongly positioned to compete, not just today, but over the long term in Australia. We continue to get a lot of interest from firms, and we expect that we will continue to grow at rates at or beyond what we've grown it in the past. In terms of taking our business system global, the best thing we can do for shareholders is prove that our partner on a driver model with our central services team and the different things that we have within our model will work in other markets. To the degree that we can do that, we can get a return on that intellectual property of the group for all of you as shareholders. We know this business system and our partner on a driver central progress team. The way we go about business is very unique and increasingly well regarded around the world where we've got a very good following, a very international shareholder base. On the next slide, as an outline of the U.S.A. opportunity across Australia, California and Texas. We started in California, very focused there. We're very excited about the firm we've announced that we're partnering with in Florida and North Carolina. The 3 largest McDonald's restaurant markets are California, Texas and Florida, you might see some theme in that. From here, we are, in my view, a critical mass for our business, and we can prove up the model strongly in the U.S. market, very quietly confident of that. On the next slide, we're showing the progress that we're making. If we look at, Kenny, if you could just slide up back to that double slide, the 6x doubling, if you would, please? When you read the U.S. progress, I'll draw your attention to the fact that it took us from 2007 to 2015 to get to $20 million revenue in Australia. It's taken us 18 months to do that here in the U.S. The mission, values and vision of our group, combined with a clear strategy focusing on private business owners and our partner owner driver structure with our permanent capital HoldCo is attractive in this market. I hope that slide makes that clear. It took us 8 years to get to the same place in Australia, but it's taken us 18 months to get to here in the U.S. On this slide, sorry, Kenny. So, the Florida partnership that we announced on Monday is tremendously exciting. It's a good-sized firm with a really great group of partners and professionals who I'm extraordinarily humbled to have shown the faith in our group that they have by joining us in this way, respecting our model and entering into a partnership that preserves the structure and uniqueness of our third Partners operating system. All 4 of the equity partners have made long-term commitments. It's a leading group to McDonald's franchisees for more than 35 years in the U.S. We have a leading position in Australia, and we believe that there's a global opportunity servicing that type of client, which is very exciting. On Page 15, next slide is the progress in 5-year period. So, think about the former 5-year start-up, 5-years foundation, build and accelerate, you can think about that as a journey of the group, and you can think about that slide as well as what we think is possible in the market like the U.S. and 30% revenue CAGR over that period of time is probably not a surprise. Although I'm not looking to convince you of that, I occasionally get accused of being a promoter. I have no interest in promoting anything other than the fact we've got a tremendous team, that are very committed to looking out for their people and clients and making a positive impact on their communities and that are very good at what they do. I must say that I'm humbled and proud to work with those people every day. So that's kind of the way we're looking at the world right now. I think we've set up a facility so that we can take questions. Over that 18 years, 30% revenue CAGR. We've maintained our margins. You'll note at 29%, 30%, 33%, 28% over those periods. We expect that, that will continue for a long time. We think there's a 10% conversion to NPAT over 5-year period. As Ken outlined, interest rates go up, they go down, and it impacts our numbers. But we're ultimately in the owner earnings, earnings power business. We're not looking to report a number every quarter or 6 months that gets anyone excited. But over 5-year periods, as you can see there, I think what we can do together is pretty exciting. I might hand that back to you, Kenny, and try and work out how I can see the Q&A there it is. , I'd just encourage anyone who's got a question, please just pop it in the question and we'll come to that.

Greetings, Leon is on a flight. Can you share a bit more of your thinking behind the buyback when considering our stock price and intrinsic valuation, the decision to put at least some capital towards buybacks rather than focus on acquiring more firms. So, Leon, just consider our record on buybacks. We're in a unique position that we know an enormous amount about the business and its performance and prospects. We think we're best placed to buy stock back at appropriate times at valuations. It will prove to be very deep discounts to intrinsic value. We've got plenty of capital for the things we want to do. I would emphasize that we're almost always in a blackout period. So, it's very difficult for the staff to align where we've got the capital, and we're not in a blackout and we can actually do a buyback. So, whenever we can and it makes sense, where we'll do that. Can discrepancy between non-controlling interest and KPG profit be explained predominantly by expensive pointed out on Page 31. Kenny, can you show me Page 31 and I'll give you an answer to that.

So, that's exactly that slide that I went through just now, but I'll share it on screen.

So, to that question, yes, is the answer. There is the screen when you get a second to just work through those numbers that will completely explain what those numbers are. So, the NCI, so the non-controlling interest, net profit before tax, that's the 49% partner's interest that is a partnership distribution before tax. We pay tax within the company because we're a company, the non-controlling interest get their amount distributed. You can assume they're paying similar rates of tax, probably more, but there's certainly tax being paid. We pay our interest that we carry on HoldCo interest, on debt that we carry at the HoldCo from acquisitions that we've done, for example, and others, and we've got parent depreciation that has grown as we've done some fit outs in the last couple of years, we've refreshed a lot of offices including building out an office for the services team. So, I think hopefully, we carry the additional investments, which is the biggest number there. The cost of establishing in the U.S., for example, and undertaking the strategic review, there HoldCo costs. We spent over $1 million on legal and other strategic review costs to understand a path towards a U.S. listing and the business is in a position that if we were to decide to undertake a U.S. listing, we've done all of the work required to do that. We've incurred all of the expenses, as you can see, and then acquisition costs and any retention reversals. So, I hope that's clear. We've tried to make that as clear as possible. I would regard the business as having $11 million net profit before tax. In order to continue to grow it at the sort of rates you've seen, we'll continue to invest in those ways, but additional investments have gone up and down over time. So, I wouldn't see a drama there. Question, where businesses have been merged, has there been any loss of customers? Not typically. So, when we buy a business, we don't expect to lose a bunch of clients. But from time to time, we will lose some clients in any number of deals. But overwhelmingly, the decline churn rate is so low that it's actually not worth the time required to measure it. That's over 80-plus partners that have joined across more than 50 deals over 18 years. You got Kenny and I here. Happy to take any questions. I think we've run out at this point. But here we go. Please explain the rationale for increasing the facility Westpac instead of a U.S.-based lender? We could get better pricing in terms from Westpac than we could from a U.S.-based lender. We're subscale at that point. U.S. lenders want us to give them a global mandate to do all of Australia and everywhere else, which we weren't prepared to do. We think that, that creates risk it's not worth taking on. When we've got a very long established and successful relationship with Westpac and Westpac were prepared to facilitate what's an extraordinary gesture, frankly, on behalf of the business. So really useful amount of debt at the right price and on the right terms. So there was no contest between what we could at this stage do in the U.S., where we were much smaller than what we are post the recent announcement. There's an announcement where KPG bought roughly 50,000 shares, but I did not see that in the financial statements?

I can answer that one.

What's that Ken say because it in July?

Exactly. Exactly. So that's in the subsequent event note in Note 39 of the financial statements and also in the subsequent comment section in the directors' report. That's because, as Brett said, occurred after the end of the financial year-end, which is the 30th of June for us.

On that, clarify the rationale of buying back shares at a valuation. But can you please clarify the rationale considering the stock trades at 100 B? We might just have a different understanding of how to calculate the valuation of the business. We've recommended Hagstrom sort of 2-stage dividend discount model. You need to take a view as to what you think the growth rate of the business will be over time and what you think is an appropriate discount rate and to the person that asked that question, if you can answer those 2 questions, I can give you a better answer. Kenny, $5.8 million in franking credits on the balance sheet. There's no dividend policy imply these franking credits are stranded. I assume franking credits will continue to rise over time in line with tax base in Australia?

Yes. The short answer to that is we will still have those franking credits available to us. That's on a consolidated basis, Edward. So, there are a small number of our operating businesses that are structured as a company. So that frame credit is not all relating to the parent. It's a consolidated number. But to answer your question, yes, with no dividend policy, those frank credits all those still available to us. They'll just kind of sit there for now.

Look, if we do move towards a U.S. transaction we will look to sort out those franking credits as part of that situation, if that's possible. Kenny, the current loan facility structured in Australian dollars?

Yes. That $22 million facility is in Australian dollars.

Can you please talk further on how you're managing the multi-continent acquisition progress with Brett in the U.S. and Kenny and Hong Kong? It's not that complicated. Many of the firms that we're speaking to, we recently visited a firm that we've been speaking to for 11 years. When a firm is finally ready to talk to us seriously, they'll say, hey, Brett, thanks for talking to me for the last 10 years and how could we talk. So, we did a number of conversations like this in Teams. Then we visited that firm on our recent trip to Australia. We visited a firm in Scotland in March. We're happy to visit a firm wherever they are and in the meantime, talk to them on Teams. It's actually the preference of firms, at least in the initial period to do a lot of the work on Teams and Zoom. It gives them the flexibility to meet private way, wherever they like. That's worked tremendously well really since the beginning of COVID. I wouldn't have thought that it was as easy to work remotely on these things as it has actually proved to be. But as it turns out, people actually like that format. That's how we're managing that. The DD is all done digitally. We've invested significantly in software. That's a system where we can send a digital data room and make sure that the partner firm can upload all of their information and that we can do most due diligence digitally. So now, they obviously want to meet people and you want to make sure that they're all okay and can, but we've been meeting people for more than 15 years. Often, we've actually got good relationships to people when they progress from there. Of all the acquisitions we made in the last 12 months, are there any that have not met initial expectations? I don't think that we have, lest I get accused of quoting my great mentors to extensively add the key to a successful marriage is low expectations. That's Charlie Munger. We don't go into these partnerships, and they are genuine partnerships with crazy expectations on our partner firms. We go in with very high standards and expectations as to ourselves on what we can bring and what we can deliver. We're over a very long period of time, confident that mostly, if you treat people well, they'll act with sincerity and huge energy to work together. So over time, again, 5-year periods, we're very confident that things typically turn out very well. So, there's none that come to mind over the last 12 months that haven't met our expectations. We learned something in every deal. I'm a happy partner with all of the firms that we've partnered with. Frankly, every day, incredibly encouraged and impressed by the ingenuity of our partners, their commitment to the mission of genuinely helping their people in clans and making a difference in their communities. I could say a dozen things I've seen in the last 2 weeks of really extraordinary contributions from our people. That gives us a lot of energy every day. If your question is financially orientated? No, you can see in the numbers that I think the business is financially are doing tremendously well. But we remain vigilant with a very keen eye as to what happens in the businesses and the contribution that we make the quality of our partnerships. As per KPG, can you provide more details on the current intrinsic value of the business and what valuation metric do you use for the same? Well, my friend, without naming you, you mentioned the valuation of the group and your view of the appropriateness of the valuation at 100 tons PE versus us undertaking some buybacks. But the question I have for you, and there are only 2 questions you need to think about is, what do you say the likely average growth rate of KPG is going to be over a 2-stage dividend discount model 10-years and forever. What do you think is an appropriate discount, right? If you drop that in the chat, I'll give you an answer to what I think of that valuation. Next question, can you please speak to what gave you the conviction to move forward with such a relatively large acquisition in the case of Florida? So, what we call a partnership looks like a large partnership. If you understand the scope of the McDonald's business and the fact that McDonald's uses a very similar point of sales, software accounting, a global accounting methodology for their franchisees and sells the same product, cheeseburgers and Filet-O-Fish, et cetera, on an 80-20 basis to a large degree. Now, myself and a number of our partners have been attending the McDonald's Global Conference for 14, 16 years, every 2 years in Orlando and then this year in Barcelona. It's a business that we are very deep in and understand, frankly very deeply. While that partnership looks large, our confidence comes from the quality of the leadership of that business, quality of the partners and the people and the fact that it is largely centered on a business that we would consider ourselves very expert in. It feels less complex than businesses that are participating in niches that we just don't have the same depth of understanding. Now my Wiley questioner who's been asking us about the valuation of the business has answered half the question. I think the company can grow at 20% for the next decade. Well, we're 1/3 of the way through this exchange, you need to make 3 decisions. So, the first stage 10 years will assume 20%. Second stage, which is forever. If you can tell me what you think the forever the growth rate is likely to be? Then just give me a discount rate that you think is appropriate, and I'll tell you what the valuation is? You can assume that I've spent much of my adult life thinking about that number. Fundamentally, we believe that the partnerships that we're involving ourselves in, we are not paying beyond intrinsic value. We know we can add an enormous amount of value to those businesses. We think as a result, we've got a large amount of protection going into those deals with an asymmetrical level of upside. Yes. forever 15% discount rate, 20%. Well, if you think that an appropriate discount rate for our group is 20%, you drop Ken an e-mail, and I'll send you a few more books to read. But the way we think about it, is that if we stay in our circular competence with a deep amount of protection per deal, then we think that what we're doing in investing in something that we deeply understand is not more risky than our weighted average cost of capital. If you look at Columbia's value investing school, they might tell you that number is cost of capital plus 2% or 3%, you might get to 10% or 11%, but now you won't get to 20%. But if you do, you won't buy a single stock on the Australian or U.S. market. That's not anywhere near the growth prospects that you believe that KPG has. So, there it is. Coming back to the capital structure. You've spoken in the past about a max gearing of 2x? Now long term, we've talked about 2.5x net debt EBITDA. We recently saw a large PE backed firm in the U.S. with more than $500 million of revenue that is geared at more than 5x net debt to EBITDA. So, we would consider it's actually higher than that. I don't want to give away who it is and don't want to hurt their feeling. So, it's actually geared considerably higher than 5x net debt to EBITDA. So, we think that 2.5x, it's very conservative and at 1.28x, it's extraordinarily lightly geared. If you think through a business that now pays no dividend that is paying back the level of principal that we're paying back each month and has a history, the defensive nature of our industry and our business model. We think that's probably very lightly geared. Coming back to the capital structure, 2x? Yes. I hope that's clear. We could ultimately run with no debt, but that probably doesn't make a lot of sense either. The multiple is higher than the usual 1x revenue. So, a high multiple specific to this acquisition, due to the size of the opportunity? So we paid 1.25x revenue. Hopefully, everyone was able to work that out, 78% upfront, 22% in 5 years' time. We think if you run the DCF on those inputs, you'll find that suitable, 78x 1.25 and then a 5-year check-in period is very helpful. For a business of this, it's a 40-year-old business to celebrate its 40th anniversary, it's got a tremendous partner group, average age a little over 50. I think I haven't done the number, but it's about the number, 52, 54 and a tremendously dominant strong position in a very valuable niche at least from a Kelly Partners perspective. We think that our partners in that deal were very fair. They turned up and they knew what they wanted and we just agreed and said, look, we could do it this way. So that's our picture on that. We think that, that gets us now to a meaningful meaningfully sized U.S. business that justifies the investment that we're making here time and effort. Are you waiting to reach a certain size in the U.S. before listing the company's shares on a major share market such as NYSE? If not, at what point would you consider? On that, listen to the acquired podcast episode on Starbucks, they listed $250 million market cap, New York Stock Exchange are too small for Goldman's to handle that, as I were told they were too small. I think that's a very analogous story of KPG's plan and opportunity. We don't want to raise any equity capital at a price below intrinsic value. We really need to close the gap between our intrinsic value and our share price. as we do that, then we're more likely to undertake a U.S. listing. We remain committed to that course of action when it makes sense. If you look at PSC in Australia, it sold out to a large U.K.-based private equity group in the insurance base. You got A.J. Gallagher listed in New York. We think we'd rather be A.J. Gallagher and grow globally than be PSC and simply sell the business once albeit at a strong valuation. We do see the insurance broker market is directly comparable to our business. So Aus brokers Steadfast, PSC in Australia. So PSC, Aus brokers Steadfast placed at #3 by size. That's the way I think about it. Then there's A.J. Gallagher, large global and large U.K.-based private equity back group that are buying globally in the insurance broking space. Can you please talk to the progression of the U.K. and Canada? Well, we are continuing to meet firms, we've met firms in Ireland and Scotland and a number in England. We're really keen if we make the right person, but I couldn't describe us as being in a rush at all. So, there's a tremendous amount of opportunity in Australia and the U.S. when the right firm turns up, we'll be the quickest people to bring them into the group. in the meantime, we'll just keep running what is an extensive search and dating process, but no rush there at all. We don't want to spread ourselves too thinly. We think that the U.S. is a very chunky opportunity. I think you can see within what we're pulling together the opportunity to just tighten it all up and make it work in the way that we envisage is enough currently. We do consider we've always been pretty measured. So, would you consider expanding into non-English-speaking countries? It wouldn't be our first preference. We were in Barcelona in March, and we met with 12 leading investors there, and there was a lot of interest and we've been contacted by people in France and people in Spain and other non-English speaking countries. But we're not white fire the old one, I'll just step over a 0 footed hurdle rather than make it more difficult for yourself. If I look at the business talent on that's listed in Finland is working across numerous language and country jurisdictions, and I think that makes it more difficult. Any book recommendations? I do have a couple. That's a very good question. Kenny, can you do want to share the Charlie Munger screens that I haven't that talked about. So, the Fastenal book that you've recommended there, Brendan, that was on David Senra's Founders Podcast to give a shout out to David's podcast. It really is fantastic. I'll get up every week and go for a long walk listening to that. I'm never anything but inspired. Where is that page Kenny? Page 24, the Fastenal book. If you haven't seen that book, I think that's really great. I think a lot of what you see here, I think is tremendous listening to that podcast, I would recommend. I think we are a challenger brand. We want to treat people as equals. I am inspired by Mark Leonard. I'm happy to be the spokesman for our group. I have an ability to do that I understand that. I don't need to spend the rest of my life doing that. At any point where it doesn't make sense to do that. I'll just become a recluse like Mark quite happily. Share the rewards, you can see our 51-49 model, 11% of the stock is owned by our people, trying to listen rather than speak, city in human is in all people develop empathies, press [indiscernible] let people learn. Remember how little you know. These are great universal values that we've called out here, and we'll put in our owners-manual. We'll put it in our list of lists. Why? Because we want to remind ourselves as learners that these are tremendous universal ideas that we should look to adopt every day to the degree that we can, knowing that we've all got our limitations. So that's a great book worth reading, podcast worth listening to as well. I did want to call attention to these 2 slides I've included on Charlie Munger, just because Charlie's died, that's very sad, but the best advice we got from, was stop practicing law. We thought it was alright as a hobby, but as a business pretty stupid and going to investing, which is what we've done with KPG, and ongoing public, he said he was asked by Andrew who said he's never going to go public. Charlie said, you guys seem smart, but being public has its benefits, why Cris asked, doesn't it create a lot of problems? No. Munger said it creates a lot of opportunities. Started to rattle through a long list of reasons why being a public company can be ideal, and it concludes being public is wonderful, if you do it right. The key is to avoid thinking about it too much, being honest and diligence, slowly building a reputation. That's what we're trying to do. We'll slightly build a reputation for doing the right thing, and that's working out pretty well. I've included Slide 33, just again for our list of lists because this is probably the best talk from my perspective that Munger ever delivered to a high school group on living well. Essentially, you said if we want to be measurable, do these things. So, I've just included that for your edification. In terms of the best books of the last little while, looking to my right, where I have my reading chair. I love the book Accelerating Excellence by James King. I think that's the book who can teach you the most about yourself and getting the best out of yourself and others. It's really a tremendous book. Many of you have probably heard me mention that. I've done a few re-reads that I think it's really great. Do you have any comments on changes to the TASA code of conduct proposed by Stephen Jones and the general direction of red-tape practitioners in the recent past? We think when politicians involve themselves in businesses that they don't know that well and don't consult as broadly as they should with that constituency. This student charter account has got a lot to say about this at the moment, and I'll try to stay out of the politic of it. Then, I think it just needs a little bit more discussion and reflection. I don't think it's going to have any negative impact on our business, et cetera. But I think anyone who knows me might have a view that I might have a view about that. But more wise heads in the room thinking through that would be better. I think it's got some elements that could open it up to abuse. It's just not really in anyone's interest. But I think when you see what happened with PwC, they probably have a view that they needed to do something rather than nothing. Now on that theme of listening more speaking less, we can take a few more questions. I'm happy to answer them with Kenny. Anything you want to share?

No.

I'd like to just finish by thanking everyone for their commitment to KPG. We are making real progress. Ken and I, we're working on, we always look at each other happily surprised at how great things sort of turn out in particular, again, as I have many times acknowledge the contribution of my wife, who is unseen and often unappreciated, but we certainly wouldn't be here in the U.S. other than for the fact that Bechard said, I know that you want to grow a global business. If you want to then now is your opportunity and we should get in there and do that. I think anyone who has been part of an effective partnership knows that it takes more than one person to do anything. I'm always keen for people to understand that while I may have a verbal ability to explain things, I would hate a situation that you would conclude that somehow much of what you see happens is the result of one person. We have 600 people. There are 100 equity partners. Our equity partners are some of the finest people I've ever met in my life. My wife is the finest business leader I have met, but incredibly astute with people and very smart, and she's made enormous sacrifices in her own career to allow me to build KPG and so, on that note, to back and our partners, in particular, and to all of our team, our clients and our shareholders, what you see in that flywheel is the collective efforts of the shared mission values and vision of many people. I consider it a singular privilege to be involved with the quality of the people that I get to spend every day of my life with, be that our family, our partners, our team members, clients and the numerous community groups that we're involved with. Ultimately, life is about who you become and who you get to spend your time with. I'm quite convinced you can get a financial return doing many things, if you've got some smart and willingness to work hard. But who you get to spend your time with us is foundationally and critically important. So, as I always say, time is limited, and death is certain. You want to reflect every day that you're doing the work that you should be with the people that you should be doing it with in a way that adds value and adds up over the long term. To all of our numerous partners is the way I think of people. I certainly want to say thank you. I think we've only just begun. We're like an 18-year-old child, man child, woman child, person child, who is just growing into its capacity. But we're on the right track. If we stay curious and humble and determined, I think the best is yet to come. I suspect people will be quite shocked as they always have been at. That's what compounding actually looks like. Thanks so much to everyone for their time today. I look forward to staying in touch and if you've got any questions, I'm there, please be in touch. I appreciate it. Thank you. As I love to say, have a great day.